Bank of England Blockchain Settlement Project
The Bank of England, the UK’s central bank, is undertaking a Proof of Concept (PoC) to understand how a renewed Real Time Gross Settlement (RTGS) service could be capable of supporting settlement in systems operating on innovative payment technologies, such as those built on Distributed Ledger Technology (DLT). It is hoped that the service will deliver a stronger, more resilient, flexible and innovative sterling settlement system for the United Kingdom to respond to the changing payments landscape. The RTGS blueprint, published in May 2017, stated that the renewed service will offer a diverse and flexible range of settlement models, to enable existing and emerging payment infrastructures to access central bank money.
The Bank considers that DLT is not yet sufficiently mature to provide the core for the next generation of RTGS. However, it places a high priority on ensuring that the new service is capable of interfacing with DLT as and when it is developed in the wider sterling markets. The Bank is partnering with a range of firms developing payment arrangements using innovative technologies. Participants in the PoC have access to a cloud-based system developed by the Bank which replicates a version of the prefunded net settlement arrangement a renewed RTGS service will offer to the major UK retail payment systems. The PoC is exploring whether innovative settlement systems are able to interface with that functionality and identifying ways in which the renewed RTGS service functionality could be expanded.
The Bank expects to publish a summary of findings from the PoC later in 2018. This will set out any enhancements to the settlement functionality offered in the renewed RTGS service to accommodate payment systems using innovative technologies. It will also set out any further work that needs to be undertaken in order to identify ways in which the renewed RTGS service functionality could be expanded.